This 13th is All About The Interest Rates, Trader!


The much awaited North Korea summit has come and gone with not much to show or move the markets! There is not decisive dominance by either the bulls or the bears! Everybody seems to be waiting for the FOMC decision on the interest rates tomorrow – and, more importantly, to discren clues about the future interest rate hikes! The FOMC decision would be out at 2pm EDT Wednesday (the 13th – if that number holds any significance to you), followed by Fed Chairman Powell’s press conference at 2:30pm EDT. 

Model Biases/Outlook:

Both the medium-term and short-term models indicate strong bullish bias, albeit with some caution to confirm the key levels (2790-2760-2740) before initating fresh new buying. As per the medium-term forecast published Wednesday night, “medium-term models now indicate switching to a slight bearish bias if the index falls below 2740 on a daily close basis.”. We reiterate that level for tehe 5th day in a row. 

Medium-to-long term Models indicate staying bullish above 2760, flat between 2760 and 2740, and bearish below 2740. 

Trading Plans for Wednesday, 06/13/2018:

Medium-to-long term investors

The models indicate no short bias until at least a daily close below 2740 (slightly bearish) or below 2735 (outright bearish). Models indicate staying flat (no positions) between 2760-35. 

Aggressive, short term, intraday, or professional traders

Those who followed our intraday models would have traded only from the long side on Tuesday, according to the trading plan which indicated: “aggressive models indicate trading from the long side while above 2780 and from the short side while below 2760 and stay flat between that range”.  These traders would have taken 5 to 6 points of profit, based on the “use tight stops/targets” indication. If still holding the long, keeping a 5-point trailing stop might be in the order. 


For Wednesday, the models indicate potential false spikes all the way to test 2790-2800 band (on Tuesday, the index approached but not touched the 2790 level, with the high registering at 2789.80) and the 2760-2745 band, and hence extreme caution is advised when trading tomorrow on an intraday basis around the 2pm timeline. Unless you are going to use extremely tight stops/targets and are very nimble to react to any potential spikes in and out, it might be best to stay out of aggressive, intraday trading on Wednesday around the FOMC decision time of 2pm EDT!

Aggressive models indicate trading from the long side while above 2780 and from the short side while below 2760 and staying flat between that range. Use tight stops when buying long or selling short to avoid getting trapped into a swiftly losing position. Be wary of potential volatility around the FOMC headline risks which may be followed by whipsaw action in both sides. 

IMPORTANT NOTICES & DISCLAIMERS – READ CAREFULLY:

(i) This article contains personal opinions of the author and is NOT representative of any organization(s) he may be affiliated with. This article is solely intended for informational and educational purposes only. It is NOT any specific advice or recommendation or solicitation to purchase or sell or cause any transaction in any specific investment instruments at any specific price levels, but it is a generic analysis of the instruments mentioned.
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